On behalf of Kelley and I, we hope your respective holidays were most pleasant and that 2017 is off to a good start for each of you.
In thinking of a (re)fresh(ed) start to the new year, I have updated the format to this weekly news email to bring it more inline with COLT’s other emails. Hopefully this refreshed and slightly reorganized format is still as easy to use; happy for any feedback you may have.
One news piece to mention here, the Land Trust Alliance sent out an email at the end of December regarding a recentIRS notice that targets easement syndication (conservation easement tax shelters) by labeling them as a “listed transaction”. This means that investors entering into such deals will soon need to file a tax shelter disclosure statement, effectively pouring cold water on what may otherwise appear as a “hot deal”.
Here’s a quote from the email we received from Wendy Jackson, the Alliance’s new Executive Vice President on the matter:
“We had been hoping that this guidance would zero in on transactions that disguise a profitable tax shelter as a charitable donation for conservation, and it appears it has done just that. By making these arrangements a listed transaction, the IRS has taken an important first step in stopping donations structured to give donors back more than they give.
“Importantly and appropriately, the IRS does not require land trusts to report these transactions, sparing their boards from having to make technical tax determinations on donations. Additionally, the IRS notice says land trusts will not be subject to penalties merely because they received such a donation.”
The above summary of the IRS’s recent guidance is worth reading and retaining, as it explains some of the elements directly related to conservation easement drafting and management, including perpetuity requirements (e.g. amendment / termination clauses), conservation purpose, required documentation, and more.